Wednesday, April 12, 2006

Will America Face an Oil Crisis Soon?

Congressman Roscoe Bartlett (R-MD) is talking about what he thinks could be the biggest challenge in our nation's history.

"The world has never faced a problem like this," Bartlett said.

A huge and sustained increase in the price of oil that would devastate our economy and the world economy, and would force all of us to change the way we live. Why?

It is a phenomenon known as "peak oil." The idea is that oil is a finite resource. There is only so much of it in the ground, and eventually we will start to run out.

One of the leading advocates of this theory is oil industry analyst Matthew Simmons. In his book, Twilight in the Desert: The Coming Saudi Oil Shock and the World Economy, Simmons uses reams of hard geological data to argue that the oil fields of Saudi Arabia -- the world's largest producer -- are in serious decline, and prices for oil at some point will skyrocket.

The quantity and price of oil follows a bell curve. When Saudi oil was first discovered and oil production was growing, the amount of Saudi oil on the market kept increasing, assuring low prices. But at the point when Saudi oil production falls and can no longer meet demand, prices go up.

And because energy-hungry nations like China and India are in the midst of economic booms, the demand for energy is increasing daily, while the supply of oil, if it is shrinking, will make oil scarcer, and much more expensive.

Some of us remember gasoline prices of 29 cents a gallon or less. Today, we have gotten used to gas prices that were once unthinkable. But what if gas prices were $7 a gallon, or more?

Bartlett said, "The peaking may have already occurred. If not now, then very soon. So I think we are probably beyond the point where we can avoid the consequences of peaking. I think what we need to do now is to simply minimize the consequences of peaking. I don't think we have a prayer of avoiding the consequences of peaking."

What is the absolute worst-case scenario from peak oil? A world war over oil supplies. But the less dire economic scenarios are not much better. It would most certainly lead to a deep worldwide recession, or even a depression.

Our economy and way of life has been built around affordable oil. Many of us live in the suburbs. We have to drive to work, to grocery stores, to just about everywhere. We enjoy a high standard of living, thanks to affordable goods and services made possible because of cheap energy.

An oil price spike to perhaps $200 dollars a barrel or more could wreck whole sectors of our economy, like the airline industry, which is already hurting from oil at $70 a barrel. Just think what would happen if airline ticket prices tripled from today's levels!

Peak oil prices would also pour a lot more money into the coffers of some regimes around the world who do not like the United States.

But if there is a plus side to peak oil, it is that unaffordable oil would finally force businesses to invest seriously in developing alternative fuel technologies.

Simmons' book has created such a stir in the energy industry that the world's largest oil company, ExxonMobil, created an ad to dispute it. It says that the Earth still has plenty of untapped oil to meet demand for decades to come.

Myron Ebell of the Competitive Enterprise Institute, a free-market think-tank, said, “At some point, oil production will peak. I think that is a long ways away…In the early 1930s, the Department of Interior estimated that we'd run out of oil by 1940. So there's a long history of predicting these things, and most of the predictions turn out not to be true.”

There is plenty of oil in the ground right here in America, but environmental protection laws prevent us from drilling for it.

Ebell also observed, “There are political obstacles to oil production in many places in the world -- most seriously in the United States.”

But if Simmons is right, America is facing a serious problem that Bartlett warns may now be too late to prepare for. He says we must begin to conserve, and to develop other sources of energy.

“I think this is going to be the overarching problem for the next decade,” Bartlett said. “We will transition from fossil fuels to renewables (renewable energy). Geology will insist on that. It will be a really bumpy ride or a less bumpy ride, depending on how we relate ourselves to it and what we do now.”

And everyone -- from President Bush on down -- knows how much America depends on oil. Bush has said that "America is addicted to oil."

And if the prediction of peak oil is true, America needs to start moving away from oil as an energy source as soon as possible.

3 Comments:

First of all the worst case scenario for peak oil is not just resource war, it is total economic collapse. It is stone-age technology trying to sustain information-age populations. It is nine dead bodies for every breathing human. And that's just the beginning, if climate and enviornmental changes already irreversably underway interact with normal stochastic environmental variablity in just the wrong way - it is quite literaly the end of the world for we poor humans.

On the other hand, the plus side to peak oil isn't just more corporate money diverted to Hybrid-electric SUVs. It heralds the possiblity for an end to the ultimate hubris of civilization. We stand at the threshold of redemtion. For the first time since, for those of you who appreciate the parable, Eve ate the apple, we are at the same time wise enough to see the folly of our supposed "dominion" over nature, powerful enough to secure for ourselves a privileged, yet sustainable place at the apex of the food chain (or something equally comfortable) and lucky enough to have achieved this knowlege before the bioshpere is simply too exhausted to support our hubris any longer.

So, you see, Peak Oil is both the death knell of 4000 years of koyaanisqatsi, and the glorious peal of the trumpets heralding a real new age. And not the pathetic, parasitic, fawning hypocrasy of the California New Age movement, but the underlying promise of real wisdom which motivated so many of those well-meaning, but woefully mis-informed cobblers and tinkers with foreign ideologies they didn't understand - I'm talking about a real birth of real understanding that doesn't just pretend to the wisdom of another culture without comprehension, but evolves of necessity from all cultures, in all places out of the inescapable collapse of the dominant paradigm.

Ok, so maybe we'll all just kill each other... But maybe we won't, and if we don't, there has never, in the history of the world, been a better opportunity for humanity as a whole, to learn from all the mistakes of all of the rest of humanity as a whole. So I say, let's get learning, and let's bid good riddance to the era of cheap oil, cheap philosophy, cheap relationships, cheap politicians, and cheap society.

Corporations aren't people, and profit is a means, not a end. A person's value is measured by their contribution to their community, not by their ability to extract wealth from it. Let conspicuous consumption be reviled as the anathema to sustainable comunity. Let service again be the measure by which we judge a person's worth in society (if indeed it ever was, let it be again, and if it wasn't, let us make the myth of yesterday, the guiding principle of tomorrow).

Damn it I am PROUD of my heritage, even if I am not proud of my administration. Let it be we Americans who embrace the post-peak economy and show the world how to be rich in real terms, instead of the hopelessly impoverished terms of the soulless capitalist.

Jefferson knew, even as a slaveholder, that holding slaves emperiled the soul - let us be so wise as to know, even as captialists, that holding capital and deeming it valuable is no less perilous because it blinds us to what is truly valuable. Communism is failed and dead, captialism must now be recognized as an equally failed expiriment. What is to succeed it? I don't know, but words like "sustainability," "community," and "humility" are sure to describe it if it actually works.

We aren't at Peak Oil just yet, but we are facing a pretty serious supply/demand imbalance that for all practical purposes will mimic many of the effects of Peak Oil. I have written an essay on it here:

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